English

Recent news items highlight the pressing need for change in the banking culture. Client-centered and sustainable banking is needed. Supervisory culture is subject to change, as well, with European supervisors converging towards a joint supervisory approach which the new top supervisors at the ECB promise to be strict and fair. The ECB and national authorities in the Euro Area's Single Supervisory Mechanism should include banking culture among their areas of focus. We need supervisors to nudge bankers towards an ethical and servant banking culture.

With increased powers for central banks during and after the crisis comes increased accountability. Traditionally, central banks are subject to 'giving reasons requirements': ex post explanations of their actions. Transparency may require different things in distinct areas of competence (monetary policy, prudential supervision, and so forth). The welcome move towards more transparency announced by the ECB will be tested twofold: balancing between transparency and confidentiality in different areas of competence and avoiding nationalistic assessment of actions by the ECB's Governing Council, which is called to work for Europe as a whole.

The forthcoming European elections focus the minds on practical improvements of the functioning of the European Union. Labour mobility is key in a single currency area. Thus, irritants and obstacles to free movement of persons should be removed. Giving workers the option to be taxed under a '29th regime', i.e. as EU citizens making use of their right to be economically active throughout Europe instead of as a taxpayer in one of the 28 Member States, is an option that should be explored. Other suggested improvements concern checking compliance with EU rules and financial transfers.

In a message for the personal lives of his audience in Rotterdam on Sunday 11 May, the Dalai Lama emphasised the need for self reflection and investigation of the mind as a condition for happiness. His message to the world was the unity of mankind, and the fundamental unity of all religions. The strife and unhappiness in today's world are caused by our focus on secondary aspects which divide (nationality, religion, the schism between rich and poor) instead of on our common humaneness. The Tibetan spiritual leader called for a secular moral ethics to take hold.

The favourite pastime of politicians is blaming Brussels when things go wrong.

Dutch Prime Minister Rutte did so again in a speech in Berlin this Spring. Politicians who are involved in top-level decision-making in Europe should refrain from such loose talk. It doesn´t do justice to the democratic legitimacy, through the European Parliament to which the European Commission is accountable, and through the European Council, whose national members are accountable to Member State parliaments. Politicians should acknowledge mistakes and tell the narrative of what binds us as Europeans and as humans.

Central banks are opening up. More transparency was the subject of the speech of ECB President Mario Draghi at the celebrations of the bicentenary of the Netherlands Central Bank. Draghi placed transparency in the context of the crisis and the effectiveness of monetary policy. Transparency cannot mean publishing detailed minutes, for legal reasons and because of the multinational context in which the Euroystem operates. The ECB should reflect on how to apply to other areas of its competence, such as banking supervision, the promise of more frankness from Frankfurt.

That the Karlsruhe-based German Constitutional Court referred questions of interpretation of EU law to the EU's Court of Justice in Luxembourg doesn't mean the German top judiciary bows before its European brethren. The reference concerns the European Central Bank's Outright Monetary Transactions (OMT), the still unused instrument to restore the effectiveness of the ECB's monetary policy and preserve the single currency. The reference is couched in terms that make clear why the German Constitutional Court sees OMT as overstepping the ECB's mandate unless they are subjected to a raft of restrictions which the Karlsruhe judges invite their Luxembourg-based counterparts to impose. The European Court is likely to confirm the legal soundness of the ECB's actions or, rather, announced actions. Whether Karlsruhe will then follow Luxmebourg remains to be seen.

Open letter to European Council Chair Herman Van Rompuy on the growing split between 18-member Euroland and the 28-State European Union. Congratulations on the strengtening of Economic and Monetary Union (economic governance, banking union) that still needs completing with steps towards a full budgetary union. And a call for more transparency on the results of the European Council's gatherings instead of hollow words and for more connection with people affected by EU decisions.

For the EU's banks, there are four challenges or concerns, each beginning with a "C": culture (needs changing), capital (in need of replenishment), credit (resumption to SMEs called for) and competition (needs reinforcement). These are also the challenges for their supervisors. Additionally, the institutional changes with 'banking union' will test the coherence and consistency of supervisory action across the Euro Area.

These days mark the 20th anniversary of the Treaty of Maastricht that made the introduction of the single currency possible. Looking back, the Maastricht foundations of Economic and Monetary Union (EMU) were not sufficiently solid. The fault lines are being repaired: strengthening of economic governance, banking union. More is to be done (Eurobonds, automatic stabilisers in a limited Euro Area budget). The cultural element of introducing a single currency should not be overlooked. Thus, slowly a genuine EMU is emerging.

Ruminations on the role of ethics in banking and other business based on a discussion of ethics in banking supervision at a meeting of international monetary law experts. Neither law nor ethics should stand in the way of applying human wisdom.

After the Cypriot rescue operations depositors of funds up to € 100,000 worried about the safety of their money at banks in Europe. Three documents adopted by European politicians just before the summer break show that, in any 'bail-in' envisaged, these deposits covered by deposit insurance systems will be unaffected. The Commission's new rules on state aid for banks likewise respect these covered deposits from any contribution by a bank’s creditors to a bank’s rescue. If the deposit guarantee system is sufficiently robust, the law says that you get your money back.

Reflections on the impact of the crisis on the European conversation. A genuine dialogue among Europeans is called for, in which participants respect each other's differences and outlook and stop making inappropriate references. Awareness of the plight of those affected by austerity in the 'periphery' is a prerequisite, as is more heartfelt communication.

The proceedings before the German Constitutional Court about complaints by German citizens against the European Central Bank’s extraordinary crisis measures remind us that the supremacy of EU law over national law is not a received doctrine among all judicial bodies in the Union. The pleadings of one part of the Eurosystem, the Euro Area’s central bank, against the other (the Bundesbank versus the ECB) before a State court may even be considered to go against the independence that the Treaty grants the central bank.

The presidential elections in Iran draw attention to the stand-off over its nuclear programme which is the reason for financial sanctions. Attention should certainly also go to the suppression of freedoms in Iran. Freedom of religion is denied to the Bahá'ís. Iran's largest religious minority, followers of a universal monotheistic religion are sharply persecuted. Seven leaders of the Bahá'í faith have been held unjustly imprisoned for five years now. The world rightly has called for their release.

The memorandum produced by the Franco-German ‘motor’ of European integration last week was weak on the central powers for resolution of banks. A ‘board’ of national resolution authorities does not qualify as a ‘Single Resolution Authority’ that the ECB rightly demands to be in place before the central bank takes over banking supervision. The European Commission has already effectively acted as a ‘resolution authority’ for banks in its capacity as overseer of state aid. On governance of EMU, the Franco-German paper doesn’t satisfy either: instead of a fund from which to stimulate States to engage in contractually agreed economic policy reform we need a limited budget for the euro area. The joint call to start distributing € 120 billion EU funding for the unemployed promised a year ago is late but a positive outcome.

Reflections on the passing of former UK Prime Minister Margaret Thatcher: her legacy on free markets, London as a financial center, faith in market-based solutions and Europe. And lasting inspiration from her courage to take a stand and tackle issues, including a male-dominated political system.

The beginning of Spring and the International Day of Happiness on 20 March provide the backdrop to reflections on the measurement of wealth, extending from GNP to other factors that determine 'gross national happiness'.

Dutch Prime Minister Mark Rutte, who advocated an exit option for Euro Area members, and British Prime Minister David Cameron, who eyes EU exit if the Union does not change in conformity with British wishes, look in the wrong direction. They gaze at the exit and at the past instead of infusing vision into the European project. An exit option would lead to financial market speculation and undermine the single currency. Going it alone is impossible in this interconnected world. The author agrees with Commissioner Neelie Kroes who remarked, in the same newspaper on Saturday 9 February 2013, that Europe is to important to be left to politicians who take a narrow, arithmetic view of Europe.

New Year’s wishes for the European Council President, offered together with suggestions on how to proceed to address the euro area debt crisis. The author invites Mr. Van Rompuy to convince the German public to accept joint issuance of public debt and a federal budget to absorb cyclical shocks in the monetary union, and to talk with austerity-affected people about the results of the policies adopted to face the crisis. The author emphasises the importance of the cultural element of the crisis. He suggests to apply the troika method of enforcement of EU policies to other areas, and to other Member States than the ‘peripheral’ States.

This column concerns two recent documents that call for bold action: the Liikanen Report on splitting banks – an EU-wide approach like the Independent Commission on Banking headed by John Vickers proposed for UK banks –, and the proposal from the European Commission to allow ten Member States to go ahead with a Financial Transaction Tax (FTT). If implemented, these moves would be welcome accompanying measures in the move towards European "banking union". (In Dutch and English.)

In response to his neighbour's critical questions on the ECB's announced measures to bring down interest rates on peripheral States' debt in so far as these rates reflect convertibility risk, professor Smits explains the Outright Monetary Transactions. The ECB is right to emphasise the irreversible nature of the euro. Its actions are within its mandate. They support the necessary economic and budgetary adaptations in the EU's debtor nations.

Looking ahead at the European Council meeting on 28-29 June 2012, the politicians convening are called upon to act as European leaders, going beyond their national mandate and providing vision. In the financial sector, full "banking union" is needed, with immediate steps to give the ECB operational tasks in prudential supervision of banks. Beyond this, the leaders should take back the initiative from markets and media and present an inspired vision of Europe as a common project.

Exploring the possibility of stimulating the economy against the backdrop of the necessity of austerity, I support an institutional innovation: an EU Minister of Finance in the person of the European Commissioner for Economic and Monetary Affairs who would also chair the Eurogroup and Ecofin Council. We should not await this development however and start thinking creatively about stimulating the economy to give hope to the unemployed young whilst also reining in budget deficits for obvious reasons (financial markets, intergenerational solidarity, greying of the population).

A column in the Dutch financial daily Het Financieele Dagblad in English and Dutch on the joint issuance of eurobonds. It sketches the proposal for a temporary mechanism of tapping the markets jointly by euoa area Member States, at the short end (Euro T-Bills) submitted by a group of experts from Austria (Franz Nauschnigg, OeNB), France (René Karsenti, ICMA), Spain (Nicolás Trillo Ezquerra, BBVA), UK (Graham Bishop) and the Netherlands (Niels Gilbert, DNB; René Smits, University of Amsterdam; WimBoonstra and Shahin Kamalodin, Rabobank; Marko Bos, European Movement, Netherlands; Alman Metten, former MEP).

Open letter to Herman Van Rompuy, President of the European Council. Wishing him well for 2012, I suggest several Treaty changes needed to make Economic and Monetary Union (EMU) in Europe work effectively, including the joint issue of Eurobonds. And I suggest paying attention to the cultural aspect of EMU: leaders should show adherence to our common values and unity and they should strengthen our ability to understand each other. (The Open letter is available in Dutch and in English)

An analysis of the background of the general strike in Portugal against the backdrop of its EFSF/EFSM/IMF programme, giving particulars of the deep cuts in social spending and salaries in the public sector, and suggesting solutions for a return to a sustainable economic situation in Europe's South-Western State (in Dutch - English and Portuguese versions also available at the website of Het Financieele Dagblad)

Dutch / Nederlands

Recent news items highlight the pressing need for change in the banking culture. Client-centered and sustainable banking is needed. Supervisory culture is subject to change, as well, with European supervisors converging towards a joint supervisory approach which the new top supervisors at the ECB promise to be strict and fair. The ECB and national authorities in the Euro Area's Single Supervisory Mechanism should include banking culture among their areas of focus. We need supervisors to nudge bankers towards an ethical and servant banking culture.

With increased powers for central banks during and after the crisis comes increased accountability. Traditionally, central banks are subject to 'giving reasons requirements': ex post explanations of their actions. Transparency may require different things in distinct areas of competence (monetary policy, prudential supervision, and so forth). The welcome move towards more transparency announced by the ECB will be tested twofold: balancing between transparency and confidentiality in different areas of competence and avoiding nationalistic assessment of actions by the ECB's Governing Council, which is called to work for Europe as a whole.

The forthcoming European elections focus the minds on practical improvements of the functioning of the European Union. Labour mobility is key in a single currency area. Thus, irritants and obstacles to free movement of persons should be removed. Giving workers the option to be taxed under a '29th regime', i.e. as EU citizens making use of their right to be economically active throughout Europe instead of as a taxpayer in one of the 28 Member States, is an option that should be explored. Other suggested improvements concern checking compliance with EU rules and financial transfers.

In a message for the personal lives of his audience in Rotterdam on Sunday 11 May, the Dalai Lama emphasised the need for self reflection and investigation of the mind as a condition for happiness. His message to the world was the unity of mankind, and the fundamental unity of all religions. The strife and unhappiness in today's world are caused by our focus on secondary aspects which divide (nationality, religion, the schism between rich and poor) instead of on our common humaneness. The Tibetan spiritual leader called for a secular moral ethics to take hold.

The favourite pastime of politicians is blaming Brussels when things go wrong.

Dutch Prime Minister Rutte did so again in a speech in Berlin this Spring. Politicians who are involved in top-level decision-making in Europe should refrain from such loose talk. It doesn´t do justice to the democratic legitimacy, through the European Parliament to which the European Commission is accountable, and through the European Council, whose national members are accountable to Member State parliaments. Politicians should acknowledge mistakes and tell the narrative of what binds us as Europeans and as humans.

Central banks are opening up. More transparency was the subject of the speech of ECB President Mario Draghi at the celebrations of the bicentenary of the Netherlands Central Bank. Draghi placed transparency in the context of the crisis and the effectiveness of monetary policy. Transparency cannot mean publishing detailed minutes, for legal reasons and because of the multinational context in which the Euroystem operates. The ECB should reflect on how to apply to other areas of its competence, such as banking supervision, the promise of more frankness from Frankfurt.

That the Karlsruhe-based German Constitutional Court referred questions of interpretation of EU law to the EU's Court of Justice in Luxembourg doesn't mean the German top judiciary bows before its European brethren. The reference concerns the European Central Bank's Outright Monetary Transactions (OMT), the still unused instrument to restore the effectiveness of the ECB's monetary policy and preserve the single currency. The reference is couched in terms that make clear why the German Constitutional Court sees OMT as overstepping the ECB's mandate unless they are subjected to a raft of restrictions which the Karlsruhe judges invite their Luxembourg-based counterparts to impose. The European Court is likely to confirm the legal soundness of the ECB's actions or, rather, announced actions. Whether Karlsruhe will then follow Luxmebourg remains to be seen.

Open letter to European Council Chair Herman Van Rompuy on the growing split between 18-member Euroland and the 28-State European Union. Congratulations on the strengtening of Economic and Monetary Union (economic governance, banking union) that still needs completing with steps towards a full budgetary union. And a call for more transparency on the results of the European Council's gatherings instead of hollow words and for more connection with people affected by EU decisions.

For the EU's banks, there are four challenges or concerns, each beginning with a "C": culture (needs changing), capital (in need of replenishment), credit (resumption to SMEs called for) and competition (needs reinforcement). These are also the challenges for their supervisors. Additionally, the institutional changes with 'banking union' will test the coherence and consistency of supervisory action across the Euro Area.

These days mark the 20th anniversary of the Treaty of Maastricht that made the introduction of the single currency possible. Looking back, the Maastricht foundations of Economic and Monetary Union (EMU) were not sufficiently solid. The fault lines are being repaired: strengthening of economic governance, banking union. More is to be done (Eurobonds, automatic stabilisers in a limited Euro Area budget). The cultural element of introducing a single currency should not be overlooked. Thus, slowly a genuine EMU is emerging.

Ruminations on the role of ethics in banking and other business based on a discussion of ethics in banking supervision at a meeting of international monetary law experts. Neither law nor ethics should stand in the way of applying human wisdom.

After the Cypriot rescue operations depositors of funds up to € 100,000 worried about the safety of their money at banks in Europe. Three documents adopted by European politicians just before the summer break show that, in any 'bail-in' envisaged, these deposits covered by deposit insurance systems will be unaffected. The Commission's new rules on state aid for banks likewise respect these covered deposits from any contribution by a bank’s creditors to a bank’s rescue. If the deposit guarantee system is sufficiently robust, the law says that you get your money back.

Reflections on the impact of the crisis on the European conversation. A genuine dialogue among Europeans is called for, in which participants respect each other's differences and outlook and stop making inappropriate references. Awareness of the plight of those affected by austerity in the 'periphery' is a prerequisite, as is more heartfelt communication.

The proceedings before the German Constitutional Court about complaints by German citizens against the European Central Bank’s extraordinary crisis measures remind us that the supremacy of EU law over national law is not a received doctrine among all judicial bodies in the Union. The pleadings of one part of the Eurosystem, the Euro Area’s central bank, against the other (the Bundesbank versus the ECB) before a State court may even be considered to go against the independence that the Treaty grants the central bank.

The presidential elections in Iran draw attention to the stand-off over its nuclear programme which is the reason for financial sanctions. Attention should certainly also go to the suppression of freedoms in Iran. Freedom of religion is denied to the Bahá'ís. Iran's largest religious minority, followers of a universal monotheistic religion are sharply persecuted. Seven leaders of the Bahá'í faith have been held unjustly imprisoned for five years now. The world rightly has called for their release.

The memorandum produced by the Franco-German ‘motor’ of European integration last week was weak on the central powers for resolution of banks. A ‘board’ of national resolution authorities does not qualify as a ‘Single Resolution Authority’ that the ECB rightly demands to be in place before the central bank takes over banking supervision. The European Commission has already effectively acted as a ‘resolution authority’ for banks in its capacity as overseer of state aid. On governance of EMU, the Franco-German paper doesn’t satisfy either: instead of a fund from which to stimulate States to engage in contractually agreed economic policy reform we need a limited budget for the euro area. The joint call to start distributing € 120 billion EU funding for the unemployed promised a year ago is late but a positive outcome.

Reflections on the passing of former UK Prime Minister Margaret Thatcher: her legacy on free markets, London as a financial center, faith in market-based solutions and Europe. And lasting inspiration from her courage to take a stand and tackle issues, including a male-dominated political system.

The beginning of Spring and the International Day of Happiness on 20 March provide the backdrop to reflections on the measurement of wealth, extending from GNP to other factors that determine 'gross national happiness'.

Dutch Prime Minister Mark Rutte, who advocated an exit option for Euro Area members, and British Prime Minister David Cameron, who eyes EU exit if the Union does not change in conformity with British wishes, look in the wrong direction. They gaze at the exit and at the past instead of infusing vision into the European project. An exit option would lead to financial market speculation and undermine the single currency. Going it alone is impossible in this interconnected world. The author agrees with Commissioner Neelie Kroes who remarked, in the same newspaper on Saturday 9 February 2013, that Europe is to important to be left to politicians who take a narrow, arithmetic view of Europe.

New Year’s wishes for the European Council President, offered together with suggestions on how to proceed to address the euro area debt crisis. The author invites Mr. Van Rompuy to convince the German public to accept joint issuance of public debt and a federal budget to absorb cyclical shocks in the monetary union, and to talk with austerity-affected people about the results of the policies adopted to face the crisis. The author emphasises the importance of the cultural element of the crisis. He suggests to apply the troika method of enforcement of EU policies to other areas, and to other Member States than the ‘peripheral’ States.

This column concerns two recent documents that call for bold action: the Liikanen Report on splitting banks – an EU-wide approach like the Independent Commission on Banking headed by John Vickers proposed for UK banks –, and the proposal from the European Commission to allow ten Member States to go ahead with a Financial Transaction Tax (FTT). If implemented, these moves would be welcome accompanying measures in the move towards European "banking union". (In Dutch and English.)

In response to his neighbour's critical questions on the ECB's announced measures to bring down interest rates on peripheral States' debt in so far as these rates reflect convertibility risk, professor Smits explains the Outright Monetary Transactions. The ECB is right to emphasise the irreversible nature of the euro. Its actions are within its mandate. They support the necessary economic and budgetary adaptations in the EU's debtor nations.

Looking ahead at the European Council meeting on 28-29 June 2012, the politicians convening are called upon to act as European leaders, going beyond their national mandate and providing vision. In the financial sector, full "banking union" is needed, with immediate steps to give the ECB operational tasks in prudential supervision of banks. Beyond this, the leaders should take back the initiative from markets and media and present an inspired vision of Europe as a common project.

This letter, written together with colleagues from the Universities of Amsterdam and Leiden and published in Het Financieele Dagblad of 12 July 2012 argues that, for the euro area’s permanent bail-out fund to directly inject capital into banks, an amendment of the ESM Treaty is not needed.

Exploring the possibility of stimulating the economy against the backdrop of the necessity of austerity, I support an institutional innovation: an EU Minister of Finance in the person of the European Commissioner for Economic and Monetary Affairs who would also chair the Eurogroup and Ecofin Council. We should not await this development however and start thinking creatively about stimulating the economy to give hope to the unemployed young whilst also reining in budget deficits for obvious reasons (financial markets, intergenerational solidarity, greying of the population).

A column in the Dutch financial daily Het Financieele Dagblad in English and Dutch on the joint issuance of eurobonds. It sketches the proposal for a temporary mechanism of tapping the markets jointly by euoa area Member States, at the short end (Euro T-Bills) submitted by a group of experts from Austria (Franz Nauschnigg, OeNB), France (René Karsenti, ICMA), Spain (Nicolás Trillo Ezquerra, BBVA), UK (Graham Bishop) and the Netherlands (Niels Gilbert, DNB; René Smits, University of Amsterdam; Wim Boonstra and Shahin Kamalodin, Rabobank; Marko Bos, European Movement, Netherlands; Alman Metten, former MEP).

Open letter to Herman Van Rompuy, President of the European Council. Wishing him well for 2012, I suggest several Treaty changes needed to make Economic and Monetary Union (EMU) in Europe work effectively, including the joint issue of Eurobonds. And I suggest paying attention to the cultural aspect of EMU: leaders should show adherence to our common values and unity and they should strengthen our ability to understand each other. (The Open letter is available in Dutch and in English)

Comments on the outcome of the meetings of the European Council and the Euro Area Summit of 8-9 December 2011. There is a leadership crisis in Europe, with politicians reacting too late and with too modest steps to urgent issues confronting the euro area. Nevertheless, media hype and financial markets nervousness may make one forget the great strides in strengthening the "E" of EMU over the past two years, with additional steps being announced at the end of these meetings. Yet, the division between the UK and the rest of Europe reveals a lack of leadership, on the part of both David Cameron who defended narrow City interests whereas further strengthening of EU financial sector supervision is called for, and the other heads of state or government, who did not decide to stimulate the economy, notably of peripheral States, or issue eurobonds (in Dutch only).

An analysis of the background of the general strike in Portugal against the backdrop of its EFSF/EFSM/IMF programme, giving particulars of the deep cuts in social spending and salaries in the public sector, and suggesting solutions for a return to a sustainable economic situation in Europe's South-Western State (in Dutch - English and Portuguese versions also available at the website of Het Financieele Dagblad)

An overview of political, economic and legal obstacles to the introduction of eurobonds (collectively issued government bonds of the eurozone states) - ending with an edorsement of the introduction of such bonds and the pursuit of federalist solutions to the eurozone crisis (in Dutch).

A critique of the choice of legal instrument for financial support for the stability of the euro area as a whole, including peripheral economies. Going the intergovernmental way is a slow and cumbersome detour compared to the option of using EU law instruments (in Dutch).

Portuguese / português

An analysis of the background of the general strike in Portugal against the backdrop of its EFSF/EFSM/IMF programme, giving particulars of the deep cuts in social spending and salaries in the public sector, and suggetsing solutions for a return to a sustainable economic situation in Europe's South-Western State (in Dutch - English and Portuguese versions also available at the website of Het Financieele Dagblad)